1. Utah’s Health System Reform Utah Solutions for Utah Needs Norman K Thurston, Ph.D. Health Reform Implementation Coordinator 5/16/11

2. “Our health system reform efforts have been targeted to respond to Utah’s unique business and demographic needs.” “The lessons we’ve learned in our novel experiments in health system reform can serve as a guide to other states as they begin their own reform efforts.” Governor Gary R. Herbert

3. The overarching philosophy of Utah’s approach to health reform is the invisible hand of the marketplace, rather than the heavy hand of the government is the most effective means whereby reform may take place. Utah’s Approach to Health System Reform

4. Identify Problems Commit to Systemic Change Develop a Vision Create a Comprehensive Plan Understand the Problem Utah’s Approach to Health System Reform

5. Identify Problems Escalating Premium Costs Consumer Detachment Employers Dropping Insurance Too Many Uninsured Misaligned Incentives Inefficient Delivery of Care

6. Commit to Systemic Change Health Insurance Markets Personal Responsibility Transparency and Value Maximize Tax Advantages Optimize Public Programs Modernize Governance

7. Develop a Vision “Our health system reform efforts have been targeted to respond to Utah’s unique business and demographic needs.” Governor Herbert

8. Consumer-driven markets that include:  Greater Choice  Expanded Access  Individual Responsibility  Affordability  Higher Quality  Improved Health Develop a Vision

9. Create a Comprehensive Plan Get started:  Establish Foundations for Future Success Be Thoughtful:  Allow 3 Years (or more) to understand the issues and develop the approach Focus on critical areas of identified need Patience:  It will take as long as 10 years for reform to be fully implemented

10. Understand the Problem The Uninsured in Utah  10.6% in 2007 (300,000 people)  Majority are employed  Many are part-time workers  Most in small businesses  Many young immortals (18-34)

11. Comprehensive Plan for Change Insurance Market Reforms:  Administrative Simplification  Uniform Application  High Risk Pool Threshold Transparency & Value:  Tort Reform  Transparency & Consumer Data  Payment Reform

12. Personal Responsibility:  Empower Consumers  Enhance Consumer Choice Maximizing Tax Advantages:  Help Employers  Defined Contribution Market Comprehensive Plan for Change

13. Optimizing Public Programs:  Medicaid and CHIP waivers  Payment Reform  e-Notify Modernize Governance:  State Employees  State Contracting Rules Comprehensive Plan for Change

14. Two Key Elements Defined Contribution Market The Utah Health Exchange

15. The Defined Contribution Market An Entirely New Insurance Market Similarly to Defined Contribution Retirement Benefits Employers Set Payment Amounts Employees Have Control Over How Funds are Spent to Meet Needs Choice and Accountability Move to the Employee Side of the Equation

16. Keeping All Payments Pre-Tax  Employees cannot be penalized for health status  Guaranteed issue (Same options for all employees)  Contributions cannot be discriminatory The Defined Contribution Market

17. Advantages to the Employer  Simple  Expand Benefit Offerings  Predictable future costs  Tax Advantages

18. The Defined Contribution Market Advantages to the Employee  Individual Control & Choice  Pay with Pre-Tax Dollars  Expansion  Portability  Premium Aggregation  Engagement

19. The Defined Contribution Market Impacts on the health system  Informed choice leads to competition  Plans respond directly to consumers  Consumer involvement leads to better health choices and outcomes

20. “Rather than the traditional one-size-fits- all approach inherent in the-defined benefit model, employees can now use the defined contribution from their employers to shop for health insurance tailored to their individual needs and circumstances.” Governor Herbert The Defined Contribution Market

21. Why an Exchange? Fundamental health reforms are the foundation Technology can facilitate reforms The Utah Health Exchange is designed to enhance consumer choice and the ability of the private sector to meet consumer needs

22. What is the Utah Health Exchange? Internet-based information portal Connects consumers to vital information  Single shopping point with reliable information  Side-by-side comparisons Consumers make informed choices about healthcare Execute choices electronically

23. The Utah Health Exchange “With the creation of the Utah Health Exchange, Utah employees also benefit from expanded access, choice, and control over their health care options.” Governor Herbert

24. Core Components of the Technology Health, Cost & Quality Information Individual & Family Products  Find a Broker  Buy direct  Comparison shop (a la Travelocity.com) Employer-sponsored plans  Backbone of the Defined Contribution Market  Facilitates transactions  Enables comparison and choice

25. Utah Health Exchange Timeline March 2008  Legislative Task Force  Established an “Internet Portal” March 2009  Defined Contribution Market August 2009  Limited Launch for Small Businesses  Three Carriers (SelectHealth, Regence, Humana)

26. Utah Health Exchange Timeline March 2010  Updates based on lessons learned April 2010  Large Group Pilot August 2010  Full Launch for Small Businesses  Added United Health Care

27. Utah Health Exchange Timeline 2011 (Current)  Focus on Small Employers  Marketing and Outreach  Incorporate Information from All Payer Claims Database

28. How Does it Work? Small Employers – 2-50 employees  75% Participation requirement Brokers/Insurance Producers  $37 pepm commission Private partners  eHealthApp  bswift  HealthEquity  $6 pepm admin fee

29. How Does it Work? 5-Phase Process Flow  Application Process  Underwriting & Rate Setting  Employer Decisions  Shopping & Enrollment Period  Invoicing and Payment

30. Current Status (April 1, 2011) Plan Choice:  146 plans from 4 insurers 4-Month Enrollment:  100 Employers (20 previously uninsured)  1,300 Employees  2,800 covered lives

31. Current Status (April 1, 2011) Defined Contribution:  Range of $0 - $1,683  $360 per employee on average Rate Comparison  Rates are audited to be comparable with traditional small group rates

32. Lessons Learned & Keys to Success Engage brokers as a valuable partner Embrace private solutions instead of hiring programmers Solution must be scalable Ensure a level playing field inside/outside the Exchange Beta tests are especially critical Plan extra time and go slow

33. Health System Reform in Utah – 2011-12 The Utah Health Exchange  Fine tune the small group Exchange  Focus on scalability  Explore multi-state collaboration  Design consumer-centric module Modernize the State Employees Health Benefit  Defined contribution  Better choices

34. Optimize the Medicaid program  Proper incentives  Control costs - Pay for value  Consumer involvement All Payer Claims Database  Inform consumers  Power-up risk adjustment  Key to payment reform Health System Reform in Utah – 2011-12